Rod the Mod dances with Time Value of Money. Again.
In last month’s Properties Magazine, we introduced the overall concept of Time Value of Money. There are six methods associated with TVM, called the six functions of the dollar. The first three are compounding functions, moving money forward over time, and these were covered in the September issue. The last three are discounting functions, moving money backward over time, and these are covered in the current October issue. All are critical functions to understand and can be applied to a wide variety of scenarios, not just real estate. And while knowing how to use a financial calculator, such as an HP 10Bii or HP 12C, or the financial functions in MS Excel is a must in order to determine the answer, this article will illustrate how to set each function up as well as provide a real-world example. To read all about the last three functions, click here.
